The Occupy Wall Street movement has sustained many offshoots, including the high-level wonkery of Occupy the SEC and the direct-action foreclosure defense of Occupy Our Homes. Now another offshoot will attempt an innovative solution to the private debt crisis, which has been welling up in America for decades.

This campaign began back in September with Strike Debt, which started with activists handing out 5,000 copies of what they called the “Debt Resistor’s Operations Manual,” a guide for debtors on how to navigate the often-sleazy world of debt collection and credit reports and bankruptcy processes. Providing this knowledge gave power to those drowning in debt on how to resist.

The next wave of this is a program called the Rolling Jubilee. Here’s how they explain it at their site:

We buy debt for pennies on the dollar, but instead of collecting it, we abolish it. We cannot buy specific individuals’ debt – instead, we help liberate debtors at random through a campaign of mutual support, good will, and collective refusal.

The Jubilee begins November 15 with “The People’s Bailout,” a variety show and telethon in NYC. All proceeds will go directly to buying people’s debt and cancelling it.

Let’s just explain technically how this works. Most debt is not held by the lender, but securitized, as we see with mortgages. When that debt goes bad, whether it’s student debt or housing debt or credit card debt or medical debt, the purchasers of the security want to get whatever they can for it. So they sell the “distressed debt,” often to debt recovery specialists who then hassle and harass the debtors in an effort to try and make money on the debt they purchased. Distressed debt gets purchased for pennies on the dollar. So the plan here is to basically buy up this debt, and instead of trying to collect it, the Rolling Jubilee will just cancel it. David Rees, an author and organizer with the Rolling Jubilee, explains that in a test run, the group purchased $14,000 of distressed debt for $500 and forgave it. “If you’re a debt broker, once you own someone’s debt you can do whatever you want with it—traditionally, you hound debtors to their grave trying to collect,” Rees wrote. “We’re playing a different game. A MORE AWESOME GAME.”

Obviously you magnify the purchasing power when buying and canceling distressed debt. This certainly extends the benefit a charity-type program can provide. Obviously, even this 28:1 bang-for-the-duck won’t put a heavy dent in the trillions of dollars in private debt in the system. But it’s a decent enough way to begin the process.

One problem is that distressed debt only hits a particular segment of society, which could be the most vulnerable, but which could just be people who are really good at welching on debts. Rolling Jubilee really has no way of knowing; they’re just purchasing packaged debt. In fact, the individuals who get the debt relief will not actually know they have received it. They just won’t get the harassing calls from debt collection agencies.

One salutary side benefit here is that it will give competition to the debt collection agencies on the purchase of debt. These are some of the worst companies in the world, profiting off frightening and harassing people. The Consumer Financial Protection Agency has been investigating the practices of debt collectors. They deserve to have some stress on their business model.

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to “OWS’ Rolling Jubilee Seeks to Buy and Forgive Debt”

Let’s just explain technically how this works. Most debt is not held by the lender, but securitized, as we see with mortgages. When that debt goes bad, whether it’s student debt or housing debt or credit card debt or medical debt, the purchasers of the security want to get whatever they can for it. So they sell the “distressed debt,” often to debt recovery specialists who then hassle and harass the debtors in an effort to try and make money on the debt they purchased.

The debt can be flipped several times in the process as speculators give it a try to collect the already written off debt.

One salutary side benefit here is that it will give competition to the debt collection agencies on the purchase of debt.

There are “private eye” groups in on debt collection. Wouldn’t it be great if #RollingJubilee makes these bizes go *poof*?

I love the think outside the box approach. I do hope that they keep copies of the purchased debt and that they send letters to the debtors letting them know their debt is forgiven along with a receipt (maybe with a note asking for them to help pay it forward with a $20 donation so the next round of debt can be bought and forgiven.)

Contact info comes with the debt (otherwise it couldn’t be collected) so a simple letter stating that the debt has been forgiven would do the trick. You’ll miss some people who have moved, changed their phone to avoid collections, etc., but if they know the debt has been forgiven then they can respond appropriately to the next collection agency that calls.

Also, as Rolling Jublilee buys up debt, I hope they are checking to see if they’ve been sold the same debt more than once. That would make for some nice lawsuits, over something regular collection agencies are all too happy to ignore.

It seems to me that if debt collectors can figure out who to hassle and harass about the debt then a person who purchased that debt could also figure out a way to make it known that the debt has been forgiven because it was bought by some compassionate people who felt it was more worthwhile to “bail out” people rather than big business.

I’m not an expert though. I do know that most of these debts are bought and sold in bulk.

…Now, after many consultations with attorneys, the IRS, and our moles in the debt-brokerage world, we are ready to take the Rolling Jubilee program LIVE and NATIONWIDE, buying debt in communities that have been struggling during the recession….

From this, I can presume they have investigated all scenarios involved. I did write to them to suggest that they clarify the taxable income issue on their main website. One minor personal beef: Using the “The Peoples…” is cliched branding that conjures up lame old leftyism.

According to this article if the write-off is a gift from the debt holder, it’s not subject to taxes. The article has some snark about OWS, but it’s an interesting take on this initiative. I agree that this should be clarified on the Rolling Jubilee website, probably will be as people start taking notice.

if this proves to be in any way a success, watch out. getting into the world of “securitization” is the big leagues. every T has to be crossed, there will need to be legions of researchers and law talkers making sure every I is dotted. and expect some shady figures to, um, discourage the first OWS concern that makes this happen for more than 100K people. cause it will catch on, if a certain threshold is reached and if there is any sane and logical organization to the approach of which debt is bought in what order, and how those who benefit from it are brought into the donation fold.

but it’s a brilliantly simple idea, one progressives should adopt in many areas including debt. it’s called, ‘if you can’t beat them, join them,’ but only in the sense of recognizing that this is still a marginally constitutional democratic republic of laws, and that they supposedly apply to everyone, including those concerns who aren’t solely in business to give a handful of 1%ers six figure bonuses for no real work. use the laws their bought and paid for politicians passed for their benefit, against them. ideas like this prove it can be done.

at least until they start arresting everyone involved in this project on terrorism charges.

The OWS folk know all of this – it’s a key reason why they are getting churches involved with this (hence the use of the Biblical term “jubilee”), as churches are given more legal leeway than other NGOs in America.

The problem is that most of this debt is unrecoverable. And that means the contact info isn’t very good. People don’t live at the addresses, nor do they still hold the phone numbers. Innocent people who have no relationship to the debt get harassed every day by debt collectors. It’s actually happened to me.

So yes, you could send a letter. You just can’t be sure that the debtor would actually get it.